Co-living is growing

Co-living: where tenants rent a small room in a larger apartment or home and share common ares such as kitchens and living rooms is a concept slowly coming to reality in high-priced areas such as San Francisco, San Jose, and New York City.

The idea first surfaced about ten years ago and often featured developers retrofitting older buildings resulting in private rooms which were very small. The current movement is towards larger private spaces.

Developers are convinced that making urban living affordable in cities such as San Francisco or San Jose are what makes the concept viable. Analysts predict that reenters may be able to get co-living space in the Bay Area for $1,600 to $3,100 per month, considerably cheaper than the rent on a studio apartment.

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Expensive Rents

A new report by RentCafe finds that the most expensive apartments in the United States are not in San Francisco. This honor goes to Manhattan which has 26 of the top 50 ZIP codes with the highest rent; the highest being in Battery Park with an average rent of $5,657/month.

Not surprisingly, San Francisco is second with 13 of the highest rent ZIP codes. Southern California has five of the highest.

The news isn’t all bad, however. If you’re looking to rent give Wichita and Memphis a try; both have apartments for less than $600 a month.

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Rents Rise, Vacancies Decrease, Renewals Strong

According to a recent report, rents in March 2018 showed an average increase of 4.2 in rates, a continuing trend. yet, while rates increase the vacancy rate decreased for the fifth consecutive month to 4.4% in March (it was 4.6% in February).

Finally, the renewal of expiring leases continues to be very strong at 75.8%.

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Rents Keep Rising

Rents keep rising in the Bay Area and analysts predict there is no end in sight. The continued supply shortage has kept rental units at a premium.

Nationwide, rents rose 2.3 percent over the last year. In the Bay Area, rents rose 3 percent year over year in March in San Jose, 1 percent in San Francisco and 6 percent in Oakland. Currently, a two-bedroom apartment in Danville can go for as much as $5,400 a month.

Experts also point to the issues such as rent control in San Jose which are keeping many residents in their current homes.

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Building Boom in Oakland

There’s a building boom in Oakland with most of the new homes in apartment buildings in central neighborhoods including downtown, Uptown and Jack London Square. The developer CIM Group has announced the construction of 333 new apartments in Jack London Square.

The project will be be eight stories consisting of studios, one-, two, and three-bedroom apartments. Completion is expected by the end of 2020.

CIM is also building 288 units at 1100 Clay Street.

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Apartment Development Slowing?

One of the nation’s and Bay Area’s largest apartment developers, Equity Residential, said recently that building new housing in major U.S. cities is becoming more difficult and predicts there will be fewer projects in the future.

According to Equity Residential, higher construction costs, the price of land, and less available financing are all responsible for the slowdown.

While prices in San Francisco remain high, softening rents and the city’s higher affordable requirements have slowed development. Oakland has actually seen more proposals in the last two years as costs are lower and approvals generally faster.

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New Development: Targeting the Middle

The chronic shortage of housing in the Bay Area has left many developers focusing on one of two areas: luxury housing or low income housing. But what about the “great middle” – those who don’t make six figure incomes but can’t qualify for subsidized housing?

A group of developers in the Oakland area are focusing on just this demographic with an emphasis on “compact living”: units of 850 to 1000 square feet that can accommodate three to four people. These units will often include parking, gyms, and communal areas with an eye to keeping rents reasonably low and affordable.

Current plans call for a two bedroom unit in Oakland to rent for $2,950 per month – which is about the going rate for a studio in San Francisco.

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2017 – A Better Year for Renters?

The Mercury News reports that for the fourth consecutive month, rents in the Bay Area have decreased.

Of course, relativity comes into play here as average rents in the San Francisco metro area are $3,168; in Oakland, $2301; and in San Jose $2,640. Nationwide, the average rent is 1,272.

However, the trend looks to be positive for Bay Area renters. Many landlords are reporting unfilled units and are responding by further dropping prices. Some are even accepting applicants with less than perfect credit, providing they can supply a good explanation.

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Bay Area Rents are … Falling (!)

Yes, according to new data from Axiometrics, rents from August to September dropped from $2,800 to $2,718 in San Jose (off 2.9 percent); from $3,301 to $3,226 in San Francisco (off 2.3 percent); and from $2,413 to $2,378 in Oakland (down 1.5 percent).

Now, to keep things in perspective, rents in the Bay Area are generally up from 2015: San Jose – 0.6 percent; Oakland – 2.8 percent, while San Francisco actually dropped 6 percent (but still a whopping $3,483 for a one-bedroom apartment).

And to keep things really in perspective, the average national rent in September 2016 stood at just $1,290.

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Some Prefer to Rent

The assumption that most, if not all, renters simply can’t afford or qualify to buy simply isn’t true, particularly in big cities, according to a recent Zillow Renter Profile. In fact, San Jose, San Diego, and San Francisco have the largest segments of renters who have the income and credit score to buy in their respective cities.

This reflects the trend among young adults who are delaying homeownership longer than ever before as they complete their education and even start families.

The difficulty, of course, is that metro areas such as San Jose, San Diego, and San Francisco have a limited number of rental units and by delaying home buying the inventory is further reduced.

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